When $4 unleashed a tariff war with free voice calls and lowest data prices, the incumbent mobile operators such as Airtel, Vodafone, Idea also followed suit to tackle the competition from $4 Ambani’s
Amidst this pricing war, the telecom players are losing out on the big picture-revenues. As per industry experts, a 6% growth is most likely to be seen by the top mobile carriers of India over the next four years. Due to disruptive price model, there has been a reduction in the data revenue growth rates from 70 % to 30 % last year and analysts have warned that in the upcoming mega spectrum auction, things will only turn bad for incumbent carriers.
Reliance Jio has pre-launched its free offers and it has enabled it to garner 20% data volume market share. This further started a data tariff war among the incumbents and a slowdown in overall data revenues for the sector.
Lower data growth is expected to be translated in top telecos reporting lower $4(earnings before interest, tax, depreciation & amortization) over the next three years.
For instance, $4’s Ebdita estimates has been cut in F17/F18/F19 by 6%, 11% and 9%, respectively by $4. Airtel’s Ebdita for F18/F19 is expected to be only 3% lower.
Reliance Communication’s Ebdita has been estimated by 16% and 18 % for F17 and F18 respectively.
“Multi-brand spectrum auction would lead to a higher 'net debt to
According to
However, Bharti-Airtel’s is expected to stay comparatively lower at 2.4-to-2.5x as they expect India's No 1 mobile carrier to spend well under $1 billion in new spectrum purchases next month.
"We also expect Bharti's net debt/Ebitda to stay around 2.5x through F17-18 despite participation in the spectrum auction, given that it continues to de-lever in Africa, having already announced sale of assets worth $3.25 billion in the last 24 months," Goldman Sachs said in a note to clients.